New economic orders seen from Indonesia, India polls

As Indonesia and India conduct their respective polls, the two countries are seen setting different paths for their economies.

According to an Bloomberg article written by Pankaj Mishra, “India and Indonesia, relegated to the ranks of the ‘fragile five’ economies, have witnessed a sudden uptick in foreign investment as they go to the polls.”

He added that “Financial markets have responded exuberantly to the prospect of Narendra Modi and Joko ‘Jokowi’ Widodo assuming power in New Delhi and Jakarta, respectively, where they are expected to initiate more ‘reforms’—a much-bandied-about word that in this context means enhanced opportunities for quick profit-making.”

From the onset of the polls in India, Modi has pledged good governance and development, with his party’s 52-page manifesto welcoming foreign direct investment by almost all companies—except by overseas supermarkets—in a bid to create much-needed jobs and kick-start the flagging economy.

India’s 814-million-strong electorate are forecast to inflict a heavy defeat on the ruling Congress party, in power for 10 years and led by India’s famous Gandhi dynasty.

The BJP also pledged to simplify the taxation system, review labor laws and focus on infrastructure such as new cities, high-speed railways and broadband Internet.

The right-wing party, voted out of power in 2004, also stuck to controversial Hindu nationalist ideals which worry religious minorities, particularly Muslims, in Hindu-majority but officially secular India.

“Modi is unabashedly the choice of India’s biggest corporate houses, which have used their ownership of the media to sell him as a savior to the Indian masses. He is also supported by such influential nonresident Indians as the Columbia University economists Jagdish Bhagwati and Arvind Panagariya. Jokowi, on the other hand, owes his rise to the Indonesian masses, who are fed up with inequality and corruption,” Mishra said.

Fresh face in Indonesia polls

For his part, Jokowi is a fresh face in politics in the world’s third-biggest democracy, which has long been dominated by aloof ex-military figures and tycoons from the three-decade rule of dictator Suharto.

Some 186 million voters are eligible to vote in Indonesia, and around 230,000 candidates are competing nation–wide for about 20,000 seats.

Jokowi, a former furniture business owner, has been a political phenomenon since his meteoric rise to the Jakarta’s top job in 2012. His common touch—he regularly visits Jakarta’s slums in his trademark checked shirt—has won him a huge following.

Whoever replaces Indonesian President Susilo Bambang Yudhoyono—due to step down after 10 years in power—will inherit tremendous challenges, with growth in Southeast Asia’s top economy slowing, religious intolerance on the rise, and corruption endemic.

“More broadly, economic nationalism has been on the rise in Indonesia, reflected in the government’s decision to ban mineral exports and force miners to build smelters locally.

Even Jokowi’s fiercest political opponent, Prabowo Subianto, a holdover from the Suharto era, promises to build a ‘people economy’ and to increase investment 10-fold in agriculture, which 70 percent of Indonesians still depend on for a living,” Mishra said.

He said that the cases of India and Indonesia tracks two type of development tacks: “neoliberal regime of financial liberalization and privatization led by strongmen and Ivy League-educated economists.”

“The results were disastrous,” he further said.

“In the last decade, many Latin American governments have moved to embrace an alternative development strategy, one that cannot easily be pigeonholed as ‘left’ or “right.”

Brazil, for instance, has tried to combine open markets with social democratic policies; it has mixed fiscal discipline and foreign investment with interventionist policies, including price control and taxation, to help build a social welfare system for the poor,” Mishra said.